Obama climate change plan will hurt steel: AISI

NEW YORK  President Obamas plan to combat climate change would raise costs and hurt business, according to steel and manufacturing interests.

The plan announced June 25 includes placing limits on carbon emissions from power plants, encouraging international cooperation on limiting greenhouse gases and developing climate-change-resistant infrastructure to protect against droughts and flooding.

"All weather events are affected by a warming planet," Obama said. "These costs can be measured in lost lives, lost businesses and hundreds of billions of dollars of emergency relief. ... Power plants can still dump unlimited amount of carbon pollution into the air for free. Its not fair, its not right, and it needs to stop."

Thomas Gibson, president and chief executive officer of the American Iron and Steel Institute, told AMM that new carbon regulations on power plants would force energy companies to retrofit their facilities, ultimately raising costs for steelmakers. "The costs of that retrofitting that conversion could be very expensive," he said. "What we dont know is what the regulations will actually require."

Energy accounts for about 20 percent of the North American steel industrys expenditures, and if power plants are forced to spend more to reduce their emissions, those costs would be passed on to steelmakers, Gibson said. Carbon emission limits would place the United States at a disadvantage to countries such as China that lack carbon limits, he added.

"Policies like those proposed by the President raise energy costs on domestic companies and threaten our ability to remain competitive in this international manufacturing environment," Gibson said.

A final set of rules on carbon limits are expected to be put in place by June 2015, a timetable that Gibson called "very aggressive."

Obama anticipated criticism from manufacturing interests and said that U.S. industries will find ways to innovate.

Obama also announced that the federal government would work with states and municipalities to develop infrastructure to aid against flooding and drought, which Gibson said could increase steel demand.